Rather than building more star hotels, our effort should be on increasing the number of tourists so that occupancy of the operating hotels can increase

The Statistics Bureau of Nepal recently released the National Hotel and Restaurants Survey, which put the number of hotels at 14,563. Nepal Tourism Statistics 2023 shows there are 1,401 star and tourist standard hotels in the country with 53,365 rooms. In 2024, 1,147,567 tourists visited Nepal, a promising figure despite the high air fare.

The president of the Hotel Association of Nepal has made it clear that we are utilising just one-third of the total hotel capacity as they can accommodate more than three million tourists a year. The survey also mentions that the hotel rooms, hotel staff, furniture, food and workers' salaries consumed Rs 216.73 billion a year whereas they contributed Rs 109.27 billion to the national economy. The surface analysis of the rate of returns generates a clear picture of our position in achieving returns against investment.

The World Tourism Organisation (UNWTO) defines tourists as people travelling to and staying in places outside their usual environment for not more than one consecutive year for leisure, business and other purposes. The Nepal Tourism Board takes tourists as non-Nepali citizens coming to visit Nepal from a foreign country, and the Department of Immigration allows Non- Resident Nepali (NRN) card holders to get tourist visas (Gratis) on arrival at the airport. Therefore, they are also considered as tourists. One major factor that we need to consider is how they are contributing to our national economy as tourists. This is done by calculating the number of NRNs using hotels as accommodation during their stay in Nepal or payment of different service fees determined for foreign nationals.

Given the increment in the number of hotels in the last decade, the exploration of immediate measures to increase the number of tourists in the years ahead is a challenge for us. After the opening of new international airports in Pokhara and Bhairahawa, lots of new hotels have opened in these two cities. But occupancy in the hotels is not satisfactory, which is not a good indicator for our national economy. This can lead to serious consequences in the settlement of loans invested by the banks in the construction of hotels. The deficiency of the required number of tourists occupying the currently operated hotels makes the investment of banks insecure, and thus hoteliers can become defaulters, which could paralyse the whole national economy.

Huge investments are required for the construction of well-equipped hotels in both the rural and urban areas, but the cost benefit analysis of such infrastructure may not be in our favour with the present number of tourist arrivals. Land used for constructing big hotels and roads for easy accessibility can have serious impact on the natural biodiversity, ecology and the local ecosystem. For the sustainable development of the society, increase in economic activities with minimum use of natural resource is essential. Earthquake-prone countries like ours must pay attention to all these factors before we focus on large infrastructure projects to attract multinational chain hotels.

Our current practice of establishing hotels in just a few urban areas without diversifying our tourism products will not help in the sustainable development of tourism. Tourist accommodation is a basic requirement for tourism to flourish. The establishment of world class chain hotels in our country in the last decade is a positive sign for our tourism industry, but an excess number of hotels, lodges and homestays, without taking into account the tourist arrival figures, can create a big problem for our national economy. For these hotels to improve occupancy, we need to increase tourist arrivals. The development and promotion of limited tourism products and lack of equitable development of infrastructure in all major tourist destinations will not help increase tourist numbers.

For instance, the far western region of our country holds high tourism potential, but inaccessibility, lack of skilled human resources and accommodation make it difficult to go there. The current survey shows a lopsided development of hotels and related tourism infrastructure in the far western part of the country. Hotels and lodges help create employment opportunities and increase revenue for the country, but with two-thirds of the rooms lying vacant, it tells a different story.

Conclusively, the Ministry of Culture, Tourism and Civil Aviation, Department of Immigration and the Nepal Tourism Board should build a mechanism to attract adequate number of quality tourists. We also need to have a clear vision of whether our NRNs are tourists or not so that we can calculate their exact number to determine their contribution to our national economy as tourists. Rather than building more star hotels, our effort should be on increasing the number of tourists so that occupancy of the currently opened hotels can increase.

Infrastructure development, diversified and accessible tourism sites, simplified legal matters, tourist inflow are major determining factors for the establishment of a hotel to run profitably. Furthermore, one major reason that motivates the chain hotels to extend their hotels in any country is the data of tourist arrivals. Our present system of managing tourist data, which keeps NRNs and tourists in one basket, is not scientific and practical. It does not guarantee safe investment, and as a result, return on the investment may not be secure, sending the message that Nepal is not sound for foreign investment in hotels. Another serious concern is that the hotels' regular repayment of loans may be disturbed if their occupancy does not increase.

Gurung is a former member of the National Planning Commission and Sindurakar is Chief Administrative Officer, Nepal Mountaineering Association